WHAT IS JUNK SILVER?

Junk Silver: The Ultimate Guide for Buyers, Sellers, and Investors

First let’s start with why anyone would want to buy junk silver. Based on our definition, Junk Silver is really just a word-phrase coined by investors to describe a circulated silver coin, but has no value other than the silver metal used to mint the coin. Meaning ‘junk silver’ has no value as rare coins.

But, coins marked as ‘junk silver’ have value because of the silver metal used to create the coin. And, precious metal investors love the silver because junk silver coins can be viewed as a substitute for bullion bars, the American Silver Eagle, or silver mining stocks.

As with all investors, the main goal is profiting from your investments. An investor profits from junk silver in two ways. The most common idea is profiting from the rising price of silver. When an investor buys a batch of junk silver and the price of silver rises, the investor can cash out and profit from her investment.

The second idea and less common, is profiting from the spread of the coins. Usually the price of junk silver coins trades in a -5% to +5% of the spot price of silver. So, if an investor found a seller willing to sell at a -5% of silver spot and turned-around to sell to a buyer willing to pay +5% of spot, then the investor would realize a profit.

When precious metals enjoyed bull markets, 90% silver coins often achieved premiums of $1.20/oz to $1.50/oz over spot, sometimes as high at $2.50/oz. So, it’s easy to see how an investor could profit from an increase in silver spot or from the spread.

In Canada — the Dime, Quarter, Half Dollar, and Canadian Dollar usually minted before 1967 are the most common Canadian coins used as junk silver.

Coin

Oz. of Silver

1920-1967 Dime

0.0599

1920-1967 Quarter

0.1499

1920-1967 Half Dollar

0.2999

1935-1967 Dollar

0.5997

How to Buy Junk Silver

A “bag” of junk silver, ($1,000 face) contains approximately 715 ounces of silver. And, it will generally track the spot price of silver. If silver goes up ten cents, a bag of 90% silver coins will rise $70 or so; however, prices sometimes lag sharp spot price movements because of the liquidity of junk silver coins.

When bags of circulated 90% silver coins can be bought — at about the same premium as 100-oz bars, or even at small premiums over 1-oz silver rounds — bags should be the first choice for many investors because of the reduction in price when an investor buys in bulk.

Choosing between junk silver coins or bullion bars is largely a matter of an investor’s goals, resources, and storage space. Although before 1965, silver coins would be ideal for survival purposes, junk silver coins sell at premium, or below premiums on 100-oz bars and, 1-oz silver rounds.

However, .999 fine bullion items (1,000-, 100-, and 10-oz bars and 1-oz rounds) can be produced at any time; as a result, there are limits to how high premiums on .999 fine silver bullion items can go.

The main difference between investing in bullion bars instead of junk silver is solving the issue of space. Junk silver requires much more storage space than bullion because of the purity of bullion verses junk silver. Junk silver is usually 90% silver, whereas bullion can be 100%, thus saving space.